Cybercrime has been on the rise since the onset of the COVID-19 pandemic in 2020 amid a global digital transformation and adoption of remote lifestyles. The cybersecurity threat has been heightened since Russia’s invasion of Ukraine; experts believe that Russia’s President Putin could retaliate against the crippling Western sanctions levied in response to Russia’s invasion by launching cyberattacks on Western countries.
With increasing awareness and rising investments in cybersecurity infrastructure across various organizations, the industry is expected to grow significantly over the long run. The global cybersecurity market is projected to reach $345.40 billion by 2026, growing at a 9.7% CAGR.
Given this backdrop, we think popular cybersecurity companies NortonLifeLock Inc. (NLOK), Trend Micro Incorporated (TMICY), and Qualys, Inc. (QLYS) could be ideal investment bets now.
Click here to checkout our Cybersecurity Industry Report for 2022
NortonLifeLock Inc. (NLOK)
NLOK in Mountain View, Calif., is a leading consumer cyber safety solutions provider in the United States, Canada, Latin America, Europe, the Middle East, Africa, Asia Pacific, and Japan. The company offers Norton 360 Security, Norton Security, Norton Secure VPN, Avira Security, and other consumer security solutions. It sells its products through its website and through retailers, telecom service providers, hardware original equipment manufacturers (OEMs), and e-commerce platforms.
On March 22, NLOK was named America's Most Trusted Companies in Newsweek’s list. This recognition underscores the company’s continuing commitment to consumer trust.
On March 15, the company launched Norton Identity Advisor Plus in the U.K. to help consumers resolve identity theft issues. This new product should expand the company’s global customer base, thereby boosting its revenues.
During the third quarter, ended Dec. 31, 2021, NLOK’s revenue increased 10% year-over-year to $702 million. Its gross profit rose 8.2% from its year-ago value to $597 million. The company’s non-GAAP net income increased 13.5% year-over-year to $260 million, while its non-GAAP EPS grew 16% from the prior-year quarter to $0.44.
The $0.45 consensus EPS estimate for its fiscal fourth quarter (ended March 31, 2022) represents an 11.7% improvement year-over-year. The $709.62 million consensus revenue estimate for the about-to-be-reported quarter indicates a 5.6% increase from the same period last year. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past year, the stock has gained 24.9% in price to close its last trading session at $27.16.
NLOK’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
NLOK has an A grade for Quality and a B grade for Value. Within the Software - Security industry, it is ranked #6 of 31 stocks.
To see additional POWR Ratings for Growth, Momentum, Sentiment, and Stability for NLOK, click here.
Trend Micro Incorporated (TMICY)
Headquartered in Tokyo, Japan, TMICY develops and sells computer security products and provides related services. It offers hybrid cloud security solutions, cloud migration, network defense, security for small- and medium-sized enterprises, endpoint security, and 5G security solutions. TMICY operates through five geographical segments: Japan; North America; Europe; Asia Pacific; and Latin America.
On April 6, Forrester named TMICY a Leader in Endpoint Detection and Response (EDR). The recognition is the outcome of the company’s consistency in innovation, customer centricity, and endpoint security.
On February 17, TMICY increased its yearly cash dividend to ¥195 ($1.57) per share, representing a 27.5% increase year-over-year, paid on March 30, 2022. This reflects the company’s strong cash flows and commitment to maximizing shareholder returns.
In January, TMICY reported that it blocked 94.20 billion threats, representing a 42% increase year-over-year in the volume of detections. Jon Clay, vice president of threat intelligence for TMICY, said, "That's a testament to our continuous effort to expand attack surface protections and improve our advanced detection technologies deployed to 500,000 commercial and government accounts and millions of consumer customers.”
In its fiscal year 2021, ended December 31, TMICY’s net sales increased 9.4% year-over-year to ¥190.36 billion ($1.54 billion). Its operating income increased 10.6% from the year-ago value to ¥43.64 billion ($352.37 million), while its net income grew 42.6% year-over-year to ¥38.37 billion ($309.79 million). The company’s net income per share came in at ¥275.06, representing a 42.6% year-over-year improvement.
The $1.66 billion consensus revenue estimate for its fiscal 2022 (ending Dec. 31, 2022), represents a 149.3% increase from the same period last year. In addition, the Street expects the company’s EPS to rise at a 12.1% CAGR over the next five years.
Shares of TMICY have risen 14.8% in price over the past year to close the last trading session at $57.99.
TMICY has an overall B rating, which translates to Buy in our proprietary rating system. It also has an A grade for Stability and Quality and a B grade for Value. The stock is ranked #2 in the Software - Security industry.
Click here to see the other ratings of TMICY for Growth, Momentum, and Sentiment.
Qualys, Inc. (QLYS)
QLYS is a pioneer and leading provider of disruptive cloud-based IT, security, and compliance solutions. The Redwood City, Calif.-based company offers Qualys Cloud Apps, Threat Protection, Continuous Monitoring, Multi-Vector Endpoint Detection and Response, and Web Application Scanning, among other solutions. It serves enterprises, government entities, and small- and medium-sized businesses across several industries.
On April 4, QLYS introduced Multi-Vector EDR 2.0 integrated with additional threat-hunting and risk mitigation capabilities for a quicker response to high-priority threats. On February 8, QLYS launched Context XDR to prioritize threat detection and reduce alert fatigue. These platforms are expected to be highly demanded by companies that are highly susceptible to cyberattacks.
QLYS’ revenues increased 16% year-over-year to $109.78 million in the fourth quarter, ended Dec. 31, 2021. The company’s non-GAAP net income increased 17.9% from its year-ago value to $33.75 million, while its non-GAAP operating income grew 16% year-over-year to $42.12 million. QLYS’ non-GAAP EPS rose 18.3% from the prior-year quarter to $0.84.
Analysts expect QLYS’s EPS and revenue to increase 7.6% and 16.8%, respectively, year-over-year to $0.80 and $113.01 million in its fiscal first quarter (ended March 31, 2022). QLYS has surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
QLYS stock has gained 33.6% in price over the past year.
QLYS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. QLYS also has an A grade for Quality and a B grade for Growth. Among the 31 stocks in the Software - Security industry, it is ranked #3.
Click here to see the additional POWR Ratings for QLYS (Value, Momentum, Stability, and Sentiment).
Click here to checkout our Cybersecurity Industry Report for 2022
NLOK shares were trading at $27.18 per share on Friday morning, up $0.02 (+0.07%). Year-to-date, NLOK has gained 5.08%, versus a -5.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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